NCLAT: Ex-parte order against Corporate Debtor via newspaper publication is valid only on exhaustion of all other communication modes [Read Order]

The National Law Appellate Tribunal (NCLAT) has held that an ex parte order passed against the corporate debtor through publication in the newspaper, if the address of the Corporate Debtor is found insufficient and the other modes of communication are not exhausted like email, then the same cannot be justified and the order can be set aside on such findings.

Case of the Appellant

The order of the NCLAT was pronounced pursuant to a ruling of the National Company law Tribunal (NCLT) wherein an order was set out against a Corporate Debtor through a newspaper publication, as the address of the Corporate Debtor was found insufficient. Corporate insolvency process was commenced against the Corporate Debtor. However the Appellant contended that there was a pre existing dispute between the parties in respect to the amount payable to the Respondent.  Thus being aggrieved by the NCLT ruling the Appellant appealed against the same.

Case of the Respondent

Respondent contended that the appeal is not within the stipulated time frame, and has crossed the limitation period as it is filed after 30 days from the date of passing of the impugned order and also submitted that there was no pre existing dispute between the parties and the Appellant was fully aware of the insolvency proceedings initiated under Section 9 of the Insolvency and Bankruptcy Code. The Respondent further submitted that the demand notice was well served and well taken by the Appellant and pursuant to the order passed by NCLT; service of notice was done via newspaper publication.

Observation of the Tribunal

The NCLAT first held that the appeal is well within the limitation period stated under Section 61(2) IBC and it was filed within 30 days from the date of order.

Further the issue of serving of notice through news paper was dealt and it was held by the NCLAT that if the address of the Corporate Debtor is found to be insufficient then the notice can be served via newspaper publication however, the same can be justified only if other modes of communication are also exhausted . In the present case, NCLAT took note that the notice was not served even once via email, then the publication through newspaper is not suffice and can be ruled out . Referring the Supreme Court Judgment in Neerja Realtors Pvt. Ltd.Janglu, the NCLT recorded that to order substituted service, a court has to be satisfied that the defendant was avoiding the service and thus. Service through an ordinary way was not possible.

Thus,  NCLAT in the present case held that passing an ex parte order against the Corporate Debtor pertaining to substituted service cannot be justified seeing the Supreme Court precedent case of Neerja Realtors Pvt. Ltd.

CASE DETAILS

Before: NCLAT

Case Title: Prakash Kailash v. Apeejay Surrendr

Quorum:  Hon’ble Justices Jarat Kumar Jain, Balvinder Singh, V.P. Singh  

Read Order@LatestLaws.com